Recently updated on April 2nd, 2023 at 11:35 pm
What does condo appraisals take into consideration for appraising condo properties? When you are looking to list your place on the market, or deciding to buy a new condo, you will need to assess its exact value. One way of doing it efficiently is by hiring someone to do a condominium valuation. Professional condo appraisers have a well-defined process to value your place swiftly and accurately.
Understanding the Condo Appraisals
While taking a mortgage for buying a condo, your lender is going to hire someone to create an appraisal. You might need to pay the fee for the appraisal since the condo appraisers are not from your lender’s organization. This lets you obtain an unbiased valuation.
8 factors that commercial condo appraisers consider:
Now, you might be wondering what does an appraiser look for during an condo appraisals, or while performing a condominium valuation. The following are the list of things that you can expect them to look at:
- Condition: The first thing professionals look for is if there are any damages to the physical structure of the building. They will look at various things like gas pipelines and other maintenance issues to determine habitability.
- Location: It is one of the important factors that determine the value of a property. For example, a property close to commercial areas might be of high value than those that aren’t. There are other factors like the proximity of hospitals, schools, police stations, etc.
- Age: The age of the property greatly influences its value. But we cannot be entirely sure that a new property will get a higher rate than an older one.
- Exterior: The exterior of the condo is a great indicator of any water damage or any other weather damage to the property. Since fixing such damages will cost extra money, the value of the property will go down.
According to Gabe, AACI Appraisers at Nicro Realty Crop, condo appraisals or condominium condo appraisal valuation has extensively grown in the last 10 years in the USA and Canada.
- Size: To state the obvious, the square footage and the number of rooms play a vital role in deciding the value of a condo. Furthermore, the size of the lot your condo sits in is also a major player.
- Infestation: Infestations are a sign that shows the possibility of damage by pests in the future. Although the condo appraisers won’t perform full research, they might just look for signs of termites and rodents.
- Safety: Most lenders look for properties with safety installations made. And are more ready to offer a loan. Hence, the commercial appraiser will look for the safety standards in the area and whether the condo adheres to such regulations.
- Energy equipment: If the property is recently renovated, the appraiser will note it down. Because renovations indicate that the seller has installed newer and more energy-efficient equipment. For example, if the heating equipment is fairly old, the appraisal value might decrease. Even things like new floors and new roofs impact the appraisal.
There can be two outcomes from an condo appraisal. They are:
Case #1: The appraisal value is higher than or equal to the contract price
In this case, you will be able to move forward with your contract and buy your dream condo. The lender will be able to sanction your loan easily because the condo appraisals denotes the actual value of the property.
Case #2: The appraisal value is lower than the contract price
In this case, the lender may not be able to provide you with the necessary loan to buy the condo. However, this also denotes that the seller is overselling the property. This scenario will let you negotiate a lower price with the seller. Most sellers do not wish to back out and lose a deal. So they often settle for a price determined by the appraiser.
Sometimes the seller might not be ready to lower the price. At such an instance, you can look for other condo appraisers. Because an appraisal is a manual process, and manual processes tend to be error-prone. This is why hiring professional appraisers will save you time and money.
The role of similar properties
Condominium appraisers generally look for comparables before arriving at a decision. Comparables are nothing but properties similar to your condo. They initially collect their market value and compare it with your condo’s features to obtain a feasible value. Hence, apart from the above-mentioned factors, this is one of the most significant ones that influence your appraisal value.
How to get a condo appraisal?
As you must have realized by now, choosing the right appraiser plays a huge role. So before you fixate on the first condo appraisers that you see, look for their professional experience. Identify how they differ from different agencies. By opting for an expert appraisal service, your appraisal will contain:
- Detailed explanation for each of the values and deductions.
- A short brief of the local market trends in your area.
- Elements of the condo that influenced the valuation.
- Neighborhood ratings and how it has affected the value.
- Structural integrity of the condo that affected the condominium valuation.
Most people wish to avoid appraisals because of the fear of losing their dream condo. But you also have to look at the benefits it will bring. You will be able to gather useful insights, and it doesn’t even take much of your time. So think carefully before deciding.